a.

The contribution margin per unit is:

Contribution margin per unit = Selling price per unit - Variable costs per unit Variable costs
per unit = Direct materials + Direct labor + Variable overhead + Variable selling expenses
Variable costs per unit = $1.90 + $2.85 + $1.25 + $2.00 = $8.00 Contribution margin per unit
= $12.00 - $8.00 = $4.00

b. The break-even units can be calculated as follows:

Break-even point in units = Total fixed costs ÷ Contribution margin per unit Total fixed costs
= Total fixed overhead + Total fixed selling and administrative expenses Total fixed costs =
$44,000 + $37,900 = $81,900 Break-even point in units = $81,900 ÷ $4.00 = 20,475 units

c. To calculate the number of units that Sokolov must produce and sell to earn operating
income of $9,000, we can use the following formula:

Operating income = (Unit contribution margin × Number of units) - Fixed costs $9,000 =
($4.00 × Number of units) - ($44,000 + $37,900) $9,000 = $4.00N - $81,900 $90,900 =
$4.00N Number of units = $90,900 ÷ $4.00 = 22,725 units

d. Income statement for Sokolov Company:

Sales revenue: 22,725 units × $12.00 per unit = $272,700 Variable costs: 22,725 units ×
$8.00 per unit = $181,800 Contribution margin: $272,700 - $181,800 = $90,900 Fixed costs:
$44,000 + $37,900 = $81,900 Operating income: $90,900 - $81,900 = $9,000

2.